Blog

Assume a Hole

We are in a series exploring the idea of a single payer healthcare system. Click here to find the prior posts.

Since we went down the joke route a few posts back, a welcome break from the humor here that is normally just sarcastic and snarky, here’s one for you:

A man poses a riddle to his economist friend. ‘You are locked in a 6 inch solid steel box, 10 feet on each side. There are no doors, windows or cracks of any kind. You have no tools, nothing at all. How do you get out?’ ‘Easy,’ replies the economist. ‘First, assume a hole. Then just walk out.’

Did you really expect to get a ‘funny’ economist joke?

So, I am going to play economist today and ‘assume’ that we can solve the problem addressed in our last post and get the math right on how much the government would give to commercial payers in a ‘Medicare Advantage for All’ plan.

What might that look like? Finally…two weeks later…

I am going to do my best to outline the idea as an advocate would.

Let’s start at the top of the flow of money.

First, the government would give a tax credit to each person, directly, with which they would buy their own MA plan. The amount per person would need to be adjusted for age and risk (similar to what happens with MA reimbursement today) and even income levels. Conservatives are now throwing copies of ‘Atlas Shrugged’ at my house. This means it would be really complex, which means the government would screw it up. Assumptions in thought experiments are so handy.

Second, commercial insurers would offer plans on the market that conform to the MA rules: coverage combines Medicare Part A (hospitals) and Part B (physicians, outpatient) services and probably Part D (meds); reimbursement is adjusted for the risk factors of the particular people they cover; bonuses can be earned based on quality measures; carriers can then add other features to compete to attract people to select them.

One key point here is that payer is capitated from the government. The plans may pay their providers any way they wish (more on that later), but the taxpayers move from being on the hook for an open-ended to one that is mostly fixed.

Since I am an ‘equal opportunity offender,’ I have to tell my liberal friends that this doesn’t have a prayer of working if you want to hang every imaginable goodie on the ‘required services’ list that these plans must cover. That was one of the fatal flaws of ObamaCare. You’re going to have to trust the market and let people tell the payers where the balance is between cost and coverage. Now there is a parade of Priuses with ‘Bernie’ stickers coming by my house to re-cycle all of the Ayn Rand paperbacks scattered in my yard. Yes, this sounds like a bi-partisan solution.

To summarize so far…we all get a tax credit from Uncle Sam to buy our own coverage from commercial payers competing for our business, but the only plans they can offer are MA-type plans.